Economic prospects bullish

UAE-China relations have never been so strong and bullish as they are today. Economic, trade, and bilateral cooperation have expanded the horizons and paved the way for more trade and business between the private sectors in the two countries.

By Haseeb Haider (Our staff reporter)

Published: Mon 31 Mar 2008, 8:34 AM

Last updated: Sun 5 Apr 2015, 6:52 PM

ECONOMIC GIANT: China is the world's fastest growing economy which is continuously setting new records of growth every year. The UAE, flooded with liquidity, has also been posting a healthy economic growth rate for the past many years. So any high-level dialogue between the political leadership is bound to make ripples in the business world, encouraging companies to look out for business opportunities.

After several years of mild growth, China received $74.7 billion in foreign direct investment in the non-financial sectors in 2007, ahead of all developing countries for the 15th successive year, reflecting a year-on-year increase of 13.59 per cent.

The total foreign direct investment (FDI) — including capital flows to the financial sectors such as banking, insurance and securities — hit $82.7 billion in 2007, up 13.8 per cent from the previous year. It shows China's role as a crucial link for multinationals' global manufacturing, purchasing and research.

The foreign trade of the country also increased rapidly. In 2007, the total value of imports and exports was $2170 billion, up 23.3 per cent year-on-year.

FOUNDATIONS: In 1985, the United Arab Emirates and China signed an agreement on economic, trade, and technological cooperation. In November 1985, the two countries established a Joint Commission of Economic, Trade and Technical Cooperation. The agreement on the Protection of Investment and the agreement on avoidance of double taxation were signed by the two countries in 1993.

In recent years, UAE-China economic relationship has come into a high peak period. After the two visits of then Minister of Economy Shaikha Lubna Al Qasimi (now Minister of Foreign Trade) to China, as well as the fruitful visit of then Minister of Labour, Dr. Ali bin Abdulla Al-Kaabi to China, and the signing of the Memorandum of Understanding on labour cooperation, the two countries reached a consensus on establishing further economic cooperation in different fields.

TRADE: A recent estimate suggests a $100 billion bilateral trade between the two countries by 2015, up from $14.2 billion in 2006, from $2.36 billion in 2000, reflecting a phenomenal growth.

In 2007, total China–UAE trade reached $20.04 billion with a growth of 41 per cent compared to 2006. Of the total, the value of exports from China was $17.03 billion, up 49 per cent and the value of imports from China was $3.01 billion, up eight per cent. UAE is now China’s second largest trade partner among GCC countries.

China's main exports to the United Arab Emirates are textile products, clothes, light industrial products, products made of the five metals (gold, silver, copper, iron and tin), handicrafts and machinery, etc. China mainly imports from the United Arab Emirates aluminum ingot, chemical fertiliser, petroleum, etc.

COOPERATION: In recent years, the labour service cooperation between the two countries is developing from service contract towards project sub-contract and general contract. The fields of bilateral cooperation include construction, factories, shops, medical care centres and sailors. Partly estimated, there’re around 200,000 Chinese in the UAE, of which around 30,000 are labourers. Whether this number will grow depends on the market demand.

“Personally, I don’t think it will grow by a large margin in the coming years. The Chinese government has been making great effort in providing domestic employment opportunities. With the rapid growth of Chinese economy, the employment problem of China will be solved mainly by domestic demand,” said Zhuang Ruijin, Economic & Commercial Counsellor at the Chinese Embassy in Abu Dhabi.

Until 2007, there were 40 Chinese companies having their agency representation in the UAE and the total investment had reached $300 million, which also reflected the attractive business environment of the country.

Zhuang said that China is also receiving more and more investment from UAE. Abu Dhabi-based Union National Bank (UNB) has set up a representative office in Shanghai, which will strengthen the relationship between the banking industry of the two nations. This month Abu Dhabi’s Etihad Airways successfully launched its flight service to Beijing, to facilitate the ever-increasing passenger traffic.

The free trade agreement between China and GCC is under negotiation now and both parties are promoting it. When concluded it would further augment the trade and investments between the two countries.

PROSPECTS: The prospects for UAE-China economic cooperation are as strong as their friendship. Already DP World, Emaar Industries and Investment, private sector real estate firm, Damac, and others have made huge investments in the real estate, automobile, and infrastructure sectors of China. But, cooperation between the sovereign wealth funds (SWFs) of the two nations in areas of joint investments and projects can benefit a lot. Abu Dhabi's ADNOC and Petrochina had already signed an MoU in 2006 to cooperate in the hydrocarbon sector .

The UAE is a prime supplier of petroleum to fuel China’s booming economy and energy-hungry China wants oil security.

There can be no better place to investment than in Asia’s economic powerhouse, while the UAE’s sovereign wealth funds, which are scouting for right opportunities can make investments, as Chinese economic growth will continue for many decades since the country’s middle class is growing and wealth creation is changing the economic landscape, opening new avenues for business.

An ADNOC Group subsidiary Borouge is setting up petrochemical facilities in China, after two state oil giants CNOOC and ADNOC signed an MOU to cooperate.

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